Virgin Atlantic plans job cuts after $1.6B rescue
Virgin Atlantic Airways will eliminate 1,150 more jobs to preserve its rescue funding as demand for long-distance flights remains depressed and Britain winds down its worker furlough program.
The cuts take the number of posts lost since the start of the COVID-19 crisis to 4,700, or about 45% of the workforce. Hundreds of cabin crew will also be put on reserve, so that the overall staff will be about half its pre-virus size.
“That is the stark reality that the aviation industry as a whole now faces,” Chief Executive Officer Shai Weiss said in an interview with Bloomberg TV on Friday. “Our job is always to protect as many jobs as we can, but ensure the survival of Virgin Atlantic.”
The move was announced less than 24 hours after Virgin
Atlantic secured final legal approval for a $1.6 billion rescue package that the Crawley, England-based carrier said was vital for it to survive the pandemic. The deal includes funds from U.S. hedge fund Davidson Kempner Capital Management and Richard
Branson, the airline’s billionaire founder.
While European shorthaul flying has begun to recover with the end of national lockdowns, the longhaul routes in which Virgin Atlantic specializes remain depressed by continuing travel curbs and a lack of demand. Cross-border traffic is down 92% globally compared with a year ago, according to the International Air Transport Association.
Weiss said that Virgin Atlantic expects to operate only a quarter of its usual capacity during the fourth quarter and that revenue next year could be half of 2019 levels. The carrier is projecting a return to profit in 2022, while calling the goal “challenging.”
The new funding means Virgin Atlantic has sufficient reserves to see it through the rest of this year and into next without a significant rebound in demand.
The CEO said he’s assuming that the trans-Atlantic flights that represent 70% of its business will recover by next summer.
“If there’s still no pickup then, it’s not just a problem for Virgin Atlantic, it’s a problem for the entire industry and for the British economy,” he said.
Weiss backed calls from across U.K. aviation for the introduction of coronavirus tests as an alternative to a 14-day self-isolation requirement for arrivals from most countries. Until rapid testing is ready Britain should look at allowing regional and even city-based travel corridors for the U.S., as it has with individual European nations and even some Greek islands, he said.